Many factors conspired to cause the semiconductor shortage that’s constraining the
production of cars and many other products. The coronavirus pandemic massively disrupted
supply chains, while increased demand for electronics due to remote work and
entertainment further strained supplies. Additionally, US trade policies limited chip imports,
further tightening supply.
Example: In 2018, as part of his trade war with China, Trump imposed 25% tariffs on $34
billion worth of Chinese imports, including semiconductors—the first of several salvos in
Trump’s trade war with China. Those tariffs are still in effect, and chip imports from China
have fallen by half as the price has gone up. China now accounts for only about 5% of
imported semiconductors, according to research firm Panjiva. But imports from other
countries have not gone up to offset the lost supply from China. A 5% contraction in supply
during a shortage can have outsized effects.
In 2019, the Trump administration banned the sale of American-made components, including
semiconductors, to the Chinese telecom giant Huawei. The goal was to limit Huawei’s
access to technology and protect national security.
However, this move had unintended consequences. It discouraged chip production in the
United States because manufacturers couldn’t sell chips to one of the world’s largest
customers.
Huawei turned to suppliers in Japan and South Korea, bypassing the ban and continuing its
operations. China also ramped up its own chip production and stockpiled chips in case of
further restrictions. The U.S. semiconductor industry says the Trump actions cost U.S. firms
millions in sales.
=> China trade war during the Trump administration significantly impacted the
semiconductor industry, leading to increased uncertainty, supply chain disruptions, and
export restrictions that threatened the globally interconnected semiconductor value chain
